CESR Market Hits New Heights in 4Q10

7:45 AM -- Worldwide sales of Carrier Ethernet switch/routers (CESRs) grew 20 percent from US$1.8 billion in 2009 to $2.2 billion in 2010, according to Heavy Reading’s newly published Carrier Ethernet Switch/Router Quarterly Market Tracker. The 2010 market was, however, about $80 million less than the high it reached in 2008. CESR networking platforms have been deployed by an estimated 700-plus communications service providers and other entities around the globe to support next-generation business connectivity services, consumer IPTV/VoD/triple-play services and mobile backhaul applications.

The CESR market jumped 14 percent quarter-over-quarter in the fourth quarter of 2010 and surpassed the $600 million mark for the first time ever. This rapid growth was due primarily to an extraordinary performance from Alcatel-Lucent (NYSE: ALU) and very strong double-digit sequential sales growth from ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). Alcatel-Lucent blew the top off sales at the end of the year for both its CESR and Ethernet service edge router platforms, with mobile backhaul applications being an increasingly important revenue driver for the vendor.

From a regional market perspective in the fourth quarter, EMEA and Latin America rose more than 40 percent and Asia rose well on a sequential basis. North America cooled down compared to the third quarter of 2010 but was still up 20 percent year-on-year. For all of 2010, Asia was the largest market for CESR platforms, followed by North America, EMEA and Latin America, in that order.

More than two-thirds of the established revenue-generating CESR vendors appeared to experience sequential sales growth in the fourth quarter of 2010. In addition to Alcatel-Lucent and ZTE, other suppliers growing at or above the market pace in the quarter included Huawei Technologies Co. Ltd. , Juniper Networks Inc. (NYSE: JNPR), Extreme Networks Inc. (Nasdaq: EXTR), Ericsson AB (Nasdaq: ERIC) and Orckit Communications Ltd. (Nasdaq: ORCT).

CESR market leader Cisco Systems Inc. (Nasdaq: CSCO) lost an estimated six share points, while No. 2 Alcatel-Lucent gained six points between 3Q10 and 4Q10. Other vendors with notable share in 4Q10 include: No. 3 ZTE, No. 4 Huawei, No. 5 Brocade Communications Systems Inc. (Nasdaq: BRCD), No. 6 Juniper and No. 7 Extreme.

The CESR market today has twice the number of revenue-generating suppliers that it did just three years ago, despite some vendor consolidation. This places significant pressure on equipment providers to continue to invest in R&D in order to keep pace with innovation and meet demanding customer requirements for performance, scale and affordability.

During Light Reading’s upcoming Ethernet Europe 2011 event in London (April 12 & 13), we will have a chance to hear about and debate the newest technology innovations -- including 100Gigabit Ethernet interfaces and MPLS-TP functionality on CESR platforms -- that will take the Carrier Ethernet industry to the next level.

— Stan "EtherMan" Hubbard, Senior Analyst, Heavy Reading, and Chairman, Ethernet Europe 2011

Interested in learning more on this topic? Then come to Ethernet Europe 2011, a two-day Light Reading and Heavy Reading conference and sponsor showcase. To be staged in London, April 12 & 13, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.

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